When abstraction is useful and necessary!

Strategy, like any proper problem-solving, needs two translation processes. One increases the level of abstraction to facilitate thinking, the other decreases it to enable action.

 Diagnosis, the translation process of abstraction

First, the real world must be translated into useful conceptual building blocks through a Process of abstraction. This is absolutely necessary because the real world is much too complex to handle mentally. We cant, for example, understand every customer and effectively respond to their individual needs. But we can analyze markets to find groups of customers that share traits and treat these as market ‘segments’. This abstraction achieves data reduction while maintaining as much useful information as possible, enabling us to grasp a situation and deal with its problems. When we have defined such segments – and other constructs needed for processing our strategic situation – we can discuss, analyze and think about alternatives.

In essence, this first step is to diagnose the decision situation. Sense-making is necessary for ambiguity reduction, which must happen before we can make decisions or even think effectively. For the brain to be able to grasp the situation, we need to form a view of the territory thereby transforming it from unknown to known. I strongly advise doing this together with others in the organization.  Once this conceptual packaging is done, and we have ideas about how our market or ecosystem works, our purpose in it, etc., we can strategize.

 Strategizing, a process of reconfiguration

Strategy formation is, at the core, conceptual reconfiguration, a rebuilding of a model world we take things apart and put them back together again differently. Many strategy frameworks aid this process by suggesting ways to generate and evaluate alternatives. Reconfiguration is partly a creative process where we can experiment with new ideas and out-of-the-box thinking about what the company is and what value it should provide. We can safely consider different courses of action and their possible outcomes, before making up our minds and risking resources in ‘live’ implementation.  

Some main paths to new alternatives rely on...

• Reforming the conceptualization schemes in the abstraction process into new ones. For example, just changing the way we form the segment may very well be a starting point for strategic innovation.
• Reconceptualization of the environment; how we see markets, competitors, allies etc.
• Reconfiguration of how we fit into this environment; in essence, what value propositions we should offer to which customers in light of their needs and the expected competition.
• Reconfigurating the organization of how we do things. What difficult things should we do – because doing them builds our competitive strength? What should we outsource? How do we orchestrate an efficient future value network?

We should then make our choices taking the future into account, so we select options that are sustainable and lead to positions that can be protected. In a sense, we generate a new conceptual map of the strategic landscape and our role in it. Next, contrasting a vision of these choices and the success we assume they will lead to in the future with the current state of things helps us identify strategic ‘GAPs’. Then we can formulate a strategy by i) formulating a number of strategic initiatives that would close those gaps and ii) putting these initiatives into a logical sequence. Before detail planning, we also make tactical considerations about how to best realize our strategy, when to do each initiative, where and with what strategic partners.

 Planning, the translation process of making things concrete and actionable

When we have reconfigured in the model world, our solution, or 'strategy', must be made concrete again. This is done through the second translation process: The Process of planning. Planning makes explicit what needs to be done by whom, when and with what resources.

Planning and execution should start by communicating the new strategic view and the main implications of the new map. Such ambiguity reduction through sense-giving is necessary, especially for the people involved in planning and execution that could not participate in previous steps. Then, enabling of action also requires that we remove uncertainty. With that, the organization should have the direction and guidance needed for executing the strategy.

Professional strategists eventually get good at using this 'skylift' to shift between a conceptually rich helicopter view and the understanding of details in real life that matters strategically. Paraphrasing Richard Normann, it is like we first map our surroundings, then change the map through strategy design, and then shape the environment by implementing the map. So in a sense, our map changes the landscape!

Inspiration:

Daft, R. L. and Lengel, R. H. (1986), “Organizational information requirements, media richness and structural design”, Management science.

Hambrick and Fredrickson (2005), “Are you sure you have a strategy?”, Academy of Management Executive.

Hill, R. C. and Levenhagen, M. (1995) "Metaphors and mental models: Sensemaking and sensegiving in innovative and entrepreneurial activities." Journal of Management.

Normann, R. (2001), “Reframing business: When the map changes the landscape”.

Thorén, K. and Vendel, M. (2019), “Backcasting as a Strategic Management Tool for Meeting VUCA challenges”, Journal of Strategy and Management.